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[quote=Anonymous][quote=Anonymous]Thank you Tea Party.  Your actions have created a 15% decline in the market.  In case you think it is anything else, let's review the timeline:

July 21: Dow is at 12,724
July 22: Boehner walks out of big Debt Talks with 3-4T reduction coal.  
July 25: Boehner says he wants a short-term only deal
July 29:  Dow is at 12,100
Aug 1:  House passes short term GOP led debt deal 
Aug 2: Dow closes at 11866
August 3: Senate passes short term debt deal
August 4:  Dow is at 11,383
August 5: S&P downgrades us
August 8: Dow is at 10,809

Total loss: 1,915 (15%)

WAY TO GO!
[/quote]

To be fair, equities are hitting the shitter because everyone thinks Obama and Congress are going to be pursuing more recovery-killing austerity measures, not because of the S&P downgrade, which most investors realize is a load of horseshit.

[quote]Carnage in stock markets as I write — and all of the headlines I see attribute it to S&P’s downgrade.

They really are trying to make my head explode, aren’t they?

Once again: S&P declared that US debt is no longer a safe investment; yet investors are piling into US debt, not out of it, driving the 10-year interest rate below 2.4%. This amounts to a massive market rejection of S&P’s concerns.

The “signature” of debt concerns should be stock and bond prices both falling; what we actually see is those prices moving in opposite directions. And that’s normally the signature of concerns about a weak economy and deflation risk (see Japan, decline of).

What triggered economy fears? To some extent I think this is a Wile E. Coyote moment, with investors suddenly noticing just how weak the fundamentals are. Also, the mess in Europe.

And maybe, maybe there is an S&P story — but not the one you think. Arguably, that downgrade will bully policy makers into even more deflationary, contractionary policies than they would have undertaken otherwise, which has the perverse effect of making US debt more attractive, since the alternatives are worse.

But all the Very Serious People, having totally misdiagnosed our problems so far, will probably double down on that wrong diagnosis as markets fall.[/quote]

Via [url=http://krugman.blogs.nytimes.com/2011/08/08/aaauuuggghhh-market-commentary-edition/]Dr Kassandra[/url][/quote]

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